Reduce Bharti Airtel Ltd for the Target Rs 2,000 by Emkay Global Financial Services Ltd
Bharti Airtel (Bharti)’s India Mobile business reported strong results, led by better-than-expected ARPU growth (Rs264 vs expectation of Rs261). Africa business continued to do well, with 45.4% and 51.6% yoy revenue and EBITDA growth, respectively. Bharti continues to execute well and attract a highquality, sticky customer base, on the back of its strong network and brand. Bharti’s valuation, excluding Airtel Africa and Indus Towers, at 13.7x/12.2x FY27E/FY28E EV/EBITDA, is expensive, considering the street has been trimming FY28E ARPU estimate—Rs306 currently vs Rs318 in Aug-25. We maintain REDUCE and increase our SOTP-based TP by ~5% to Rs2,000 from Rs1,900, as we roll forward to 1QFY29E TTM EBITDA. Higher-than-expected ARPU increase and market-share gains from peers are key risks to our thesis.
India business: Strong ARPU growth with healthy subscriber additions
India Mobile business revenue grew 3.8% qoq (street expectation: 2.5% qoq), as higher ARPU growth complemented by healthy subscriber net additions (3.3mn qoq). ARPU improvement was due to record-high postpaid subscriber net additions (1mn qoq), increasing share of data customers, and step-up in international roaming. Airtel Business continued to see strong growth in revenue/EBITDA at 3.2%/5.7% qoq, respectively. Homes services reported a weak quarter, with a slowdown in growth on account of weak subscriber net additions of 473k (vs 1.14mn/4.18mn in 4QFY26/FY26). Capex for India business in 1QFY27 remained elevated, at Rs97bn, with India Mobile/Homes segment accounting for Rs45.8bn/Rs19bn. The company guides for FY27 capex to remain at elevated FY26 levels, as it accelerates investments for data centers, fiber backhaul, etc.
Constant currency growth in AAF translates to reported currency basis
Airtel Africa revenue growth was strong, at 9.6%/45.4% qoq/yoy, on 9.3% qoq ARPU growth and 5.45mn qoq subscriber additions (4QFY26: 4.2mn). Structural growth drivers of low teledensity (~45%), low smartphone penetration (~50%), and densely populated young population continue to propel constant currency growth of >20%. With a stable FX environment, the constant currency has finally translated to reported currency growth, driving the street’s EBITDA estimate upgrades.
Outlook and valuations: Optimistic growth expectations; expensive valuations
We expect 7.5% ARPU CAGR over FY26-29E for Bharti (street: 8.8%) as the industry has already fully recovered from the disruption. At 9x FY28E EV/EBITDA, the implied multiple for the India business is 12.3x, which is at the top end of global telecom valuations. Given expensive valuations and the street’s optimistic growth expectations, we believe the riskreward is unfavorable. We maintain REDUCE and increase our SOTP-based TP by 5.3% to Rs2,000 on account of rollover, as we maintain our target multiple for the India business at 12x, factoring in the lower ARPU growth trajectory.
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